WASHINGTON — The Supreme Court ruled Tuesday that a competitor of printer maker Lexmark International Inc. can move forward with a lawsuit accusing the Lexington company of disparaging its business.
The unanimous decision upheld a federal appeals court ruling allowing Static Control Components Inc. to go ahead with a complaint of false advertising against Lexmark, a Lexington-based producer of printers and printer cartridges.
Static Control makes parts that allow the repair and resale of Lexmark toner cartridges. The two companies have been fighting over Static Control's business, and Static Control says Lexmark falsely told customers their products infringed on Lexmark's intellectual property and that using remanufactured Lexmark toner cartridges was illegal.
A federal judge threw out that complaint, but the 6th U.S. Circuit Court of Appeals reinstated it.
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Lexmark spokesman Jerry Grasso wrote in an email statement that the Supreme Court "has rejected the 6th Circuit Court of Appeal's test for standing under the Lanham Act and has adopted a different test. Under the test adopted today, the Supreme Court of the United States found that Static Control has standing to sue under the Lanham Act but made no determination on the merits of the litigation."
"Lexmark strongly believes that it has not made any false or misleading representations in its commercial advertising or promotion," Grasso wrote. "Lexmark remains confident that it will ultimately prevail in this matter."
The Lanham Act is a federal trademark law from 1946. It prohibits activities including trademark infringement, trademark dilution and false advertising.
Writing for the Supreme Court, Justice Antonin Scalia said Static Control can bring its lawsuit under the Lanham Act because the company alleges that it lost sales and had its business reputation damaged by Lexmark's conduct.
The two companies have wrangled for more than a decade over Lexmark's use of microchips in ink toner cartridges. In 2002, Lexmark began placing the chips inside the cartridges to thwart companies such as Sanford, N.C.-based Static Control from refilling and reselling the cartridges to Lexmark customers.
Lexmark later modified its chips to prevent the refurbished cartridges from working with some printers, but Static Control was able to get around the new controls with its own microchips and continued reselling used and refilled toner cartridges to Lexmark's customers.
Lexmark responded by telling its customers that use of Static Control's microchips would infringe Lexmark's patent. In 2004, Static Control sued Lexmark, alleging false advertising and seeking a ruling that its modified chips did not violate Lexmark's patent.